Panel approves cigarette tax increase

March 23, 1994|By New York Times News Service

WASHINGTON -- Going far beyond President Clinton's request, a congressional subcommittee voted yesterday to increase the federal tax on cigarettes by $1.25 a pack as part of a comprehensive bill to guarantee health insurance for all Americans.

The same panel, the health subcommittee of the Ways and Means Committee, also voted to impose a new payroll tax on all employers.

The tax would be eight-tenths of 1 percent of payroll. Most of the new revenue would be used to help low-income people and small businesses buy health insurance.

The votes came as the subcommittee neared completion on a slimmed-down alternative to Mr. Clinton's health plan proposed by its chairman, Rep. Fortney "Pete" Stark, D-Calif.

The outlook for approval in the 11-member subcommittee is precarious; and even if it is approved, its provisions may be dropped, replaced or amended in the legislative process.

But the vote on the tobacco tax is significant. The Ways and Means Committee has primary authority over tax bills, and lawmakers say that the tobacco tax is likely to be increased as part of any comprehensive health care bill.

The only question, they say, is how big the increase will be.

The federal tax is now 24 cents a pack. The new federal tax would be $1.49 a pack. Mr. Clinton proposed raising the tax 75 cents, to 99 cents a pack.

The vote on the tobacco tax was 6-5. Rep. Nancy L. Johnson, R-Conn., joined five Democrats in voting for it. Two Democrats joined three Republicans in opposing it.

None of the four Republicans on the subcommittee is expected to vote for the bill, however.

One Democrat on the panel, Rep. Sander M. Levin of Michigan, said yesterday that he could not vote for a bill that would increase the payroll tax.

"There should be much greater emphasis on cost containment," he said.

Another Democrat on the panel, Rep. Benjamin L. Cardin of Baltimore, said he is also opposed a new payroll tax.

The proposed increase in the payroll tax would raise $24 billion a year.

The move to raise tobacco taxes follows actions by many federal agencies, state and local governments and private employers to tighten restrictions on smoking.

Congress is considering a separate bill that would ban smoking in public buildings used by 10 or more people a week.

Increasing the tobacco tax by $1.25 a pack would generate $16 billion a year in new revenue, the subcommittee said.

Of that, $4 billion would be used for subsidies to businesses with 100 or fewer employees, to help them buy health insurance for their workers.

Some of the money would be used to subsidize the insurance premiums of poor people.

The money would also be used for assistance to teaching hospitals, for the removal of lead paint in private homes and public housing, for programs to help people stop smoking and for training tobacco farmers to grow other crops.

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